Hero grows babyfood business with Beech-Nut deal

By Dominique Patton

- Last updated on GMT

Related tags Infant nutrition Baby food

Swiss food group Hero has bought the US babyfood maker Beech-Nut
Nutrition, making it the number two player in American baby food.

The company said yesterday that the deal was part of its strategy to build an international position in infant nutrition. If the US competition authorities approve the deal, Hero's revenue from infant nutrition will double.

It also helps the group strengthen its position outside western Europe, and offers new growth opportunities within the US and Canadian markets, said Hero chief executive Stefan F. Heidenreich.

Beech-Nut, previously owned by the private equity group Madison Dearborn Capital Partners, and before that Nestle, has a market share of 15 per cent in the US thanks to strong brand equity and a product portfolio of around 180 items distributed across the US.

When the deal goes through, Hero's revenues from infant nutrition should rise from 17 per cent to almost 30 per cent of overall revenue.

The Swiss company, which has not been quoted on the Swiss stock market since 2003, has been looking to increase revenue from this sector to boost its poor performance in recent years.

Last year, profits dropped by two thirds to SF20.1 million on sales of SF1.359 billion, although Heidenrich said he expected a 'significant' improvement this year, due in part to the latest acquisition.

He added that the company was still on the lookout for other takeovers.

Gerber, owned by fellow Swiss company Novartis, is currently the leading brand in the US baby food market.

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